Strengthening and Streamlining LODR Compliance: SEBI Notifies Fifth Amendment to the LODR Regulations

The Securities and Exchange Board of India (SEBI) has notified the SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2025 (LODR Amendment Regulations, which can be viewed by clicking on this link) vide notification dated November 18, 2025, introducing a series of amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).

While the amendments came into force on November 18, 2025, the changes relating to Regulation 2(1)(zc), Regulation 23 and the insertion of Schedule XII took effect from December 18, 2025. These amendments seek to ease compliance, enhance clarity in the related party transaction (RPT) framework, strengthen digital dissemination of information, and align disclosure obligations across categories of listed entities, as summarized below.

1. Redefining Materiality: The Move to Scale-Based Thresholds

In a significant departure from the “one-size-fits-all” approach, SEBI has replaced the static materiality threshold (previously INR 1,000 crore or 10% of turnover, whichever is lower) with a graded, scale-based structure under the newly inserted Schedule XII. This change recognizes that a fixed monetary threshold of INR 1,000 crore was often too low and not reflective of the size and turnover of large conglomerates that undertake multiple intra-group transactions. The new materiality thresholds for determining shareholder approval as per Schedule XII are as follows:

The Explanation to Schedule XII clarifies that the “annual consolidated turnover” shall be determined based on the last audited financial statements of the listed entity.

2. Subsidiary RPT Approvals

SEBI has also recalibrated the approval mechanism for RPTs where a subsidiary is a party, but the listed entity is not. To prevent anomalous situations where the approval requirement for a shareholders’ approval is triggered but an Audit Committee approval is not, the threshold for Audit Committee approval at the listed entity level has been revised. Audit Committee approval is now required if the transaction value exceeds the lower of (i) 10% of the subsidiary’s annual standalone turnover (or 10% of paid-up share capital and securities premium account if the subsidiary lacks audited financials for at least one year); OR (ii) the materiality threshold applicable to the listed entity under Schedule XII.

3. Strengthening Governance, Compliance, Digitalization and Ease of Doing Business

The LODR Amendment Regulations introduce the following other critical changes:

1. 1. Validity of Omnibus Approvals: SEBI has explicitly codified the validity period for shareholder omnibus approvals. Approvals granted at an Annual General Meeting (AGM) are valid until the date of the next AGM. However, approvals granted at a General Meeting other than an AGM (e.g., EGM or Postal Ballot) are valid for a maximum of one year.

1. 2. Clarification on ‘Holding Company’: An explanation has been added to Regulation 23(5) clarifying that the exemption for transactions between a holding company and its wholly-owned subsidiary applies only where the holding company is a listed holding company, and not in other cases.

1. 3. Expansion of Retail Exemption: The carve-out from the RPT definition for “retail purchases” has been expanded. Previously limited to directors and employees, the exemption now covers Key Managerial Personnel (KMPs) and relatives of directors/KMPs as well, provided the purchases are made on terms uniformly applicable to all employees.

1. 4. Mandatory Electronic Payments: Regulation 12 has been amended to remove the option of issuing ‘payable-at-par’ warrants or cheques where electronic payment is not possible. Listed entities must now mandatorily use electronic modes for paying dividends, interest, or redemption amounts.

1. 5. Digital Dissemination for Bondholders: For holders of non-convertible securities who have not registered email addresses, listed entities are no longer required to send hard copies of the annual report. Compliance can now be met by sending a letter providing a web-link and optionally a QR Code to access the full report. 

1. 6. Statutory Alignment of Disclosures: Regulation 53 and Regulation 58 have been amended to ensure that submission timelines and disclosures for annual reports align with the specific statutes under which the listed entity is constituted (e.g., for statutory corporations or LLPs not governed strictly by the Companies Act, 2013).